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  • FIRST POST
    • DennisTenus
    • By DennisTenus 9th Jan 18, 5:07 PM
    • 158Posts
    • 14Thanks
    DennisTenus
    Portfolio Fund Assistance
    • #1
    • 9th Jan 18, 5:07 PM
    Portfolio Fund Assistance 9th Jan 18 at 5:07 PM
    Hi all,

    I need some portfolio fund assistance please. I have 45K cash in IWeb left to buy funds with to form my portfolio with my existing holdings as follows:

    10K Fundsmith
    10K VLS80
    5K Legg Mason IF Japan

    I'm trying to not split it between that many funds to keep costs to the absolute minimum.

    I've had suggestions before of types of things I need to look at to diversify and spread risk but I really need actual fund name suggestions as I'm no expert!

    I'd like a split of active/passive ideally too and i'm in this for the medium to long term (all being well!)

    Thanks in advance.
Page 1
    • Prism
    • By Prism 9th Jan 18, 5:24 PM
    • 352 Posts
    • 269 Thanks
    Prism
    • #2
    • 9th Jan 18, 5:24 PM
    • #2
    • 9th Jan 18, 5:24 PM
    Those are all good funds IMO. With the 45K I would add to Fundsmith and VLS80. Legg Mason IF Japan is great too but you probably don't need much more of it. The only other things you are missing is a smaller companies fund and/or an EM fund if you fancy a bit more risk. I can tell you which ones I have so you can research them yourself

    Baillie Gifford Global Discovery - overlaps a tiny bit with Legg Mason Japan but shouldnt be a problem
    Fundsmith FEET - one of the sustainable Stewart funds might be an alternative but many of them are soft closed (they have an entrance fee of 4%)
    Baillie Gifford Greater China - bit risky I reckon but huge gains for the moment
    Jupiter India
    • Alexland
    • By Alexland 9th Jan 18, 5:25 PM
    • 2,544 Posts
    • 1,928 Thanks
    Alexland
    • #3
    • 9th Jan 18, 5:25 PM
    • #3
    • 9th Jan 18, 5:25 PM
    According to my data Fundsmith has a P/E of 27 - the money has already been made on that fund, surely you cannot expect it to continue?

    VLS80 is great but given market conditions it might be time to slightly pull back on equity exposure? How about HSBC Global Strategy Balanced fund?

    Or 50:50 VLS60 and 80?

    I don't see what's so great about Japan there's good reason why the stocks are worth less and those reasons are not changing anytime soon.

    Alex
    Last edited by Alexland; 09-01-2018 at 7:37 PM. Reason: Added a bit more
    • jamei305
    • By jamei305 9th Jan 18, 5:26 PM
    • 336 Posts
    • 391 Thanks
    jamei305
    • #4
    • 9th Jan 18, 5:26 PM
    • #4
    • 9th Jan 18, 5:26 PM
    What are you hoping to gain by not putting the 45k all into VLS80?
    • DennisTenus
    • By DennisTenus 9th Jan 18, 5:36 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    • #5
    • 9th Jan 18, 5:36 PM
    • #5
    • 9th Jan 18, 5:36 PM
    Those are all good funds IMO. With the 45K I would add to Fundsmith and VLS80. Legg Mason IF Japan is great too but you probably don't need much more of it. The only other things you are missing is a smaller companies fund and/or an EM fund if you fancy a bit more risk. I can tell you which ones I have so you can research them yourself

    Baillie Gifford Global Discovery - overlaps a tiny bit with Legg Mason Japan but shouldnt be a problem
    Fundsmith FEET - one of the sustainable Stewart funds might be an alternative but many of them are soft closed (they have an entrance fee of 4%)
    Baillie Gifford Greater China - bit risky I reckon but huge gains for the moment
    Jupiter India
    Originally posted by Prism
    Thanks, interesting. So you would add more than the 10K to Fundsmith and VLS80? Surely I need to spread it a bit...

    I will check out those suggestions, thank you.

    According to my data Fundsmith has a P/E of 27 - the money has already been made on that fund, surely you cannot expect it to continue?

    VLS80 is great but given market conditions it might be time to slightly pull back on equity exposure? How about HSBC Global Strategy Balanced fund?
    Alex
    Originally posted by Alexland
    Thanks Alex, I was looking at that fund actually also whats P/E?

    What are you hoping to gain by not putting the 45k all into VLS80?
    Originally posted by jamei305
    Diversification hopefully? And hopefully when that goes down another may go up, I know this is not necessarily the case!

    I was also considering some in VLS 20% Equity to lower risk a bit and pull back on equity exposure as Alex suggests.... this a good idea?
    • Alexland
    • By Alexland 9th Jan 18, 5:41 PM
    • 2,544 Posts
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    Alexland
    • #6
    • 9th Jan 18, 5:41 PM
    • #6
    • 9th Jan 18, 5:41 PM
    P/E is the Price to Earnings ratio - a fundamental measure of if a stock price is reasonable for the income it produces. When P/Es go above 20 it's time to start worrying. The P/E of a fund is the weighted average of the stocks it contains. I have nothing against Fundsmith but that party happened, money was made, and now it's time to find something new.
    Last edited by Alexland; 09-01-2018 at 7:43 PM. Reason: typo
    • DennisTenus
    • By DennisTenus 9th Jan 18, 5:44 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    • #7
    • 9th Jan 18, 5:44 PM
    • #7
    • 9th Jan 18, 5:44 PM
    P/E is the Price to Earnings ratio - a fundamental measure of if a stock price is reasonable for the income it produces. When P/Es go above 20 it's time to start worrying. The P/E of a fund is the weighted average if the stocks it contains. I have nothing against Fundsmith but that party happened, money was made, and now it's time to find something new.
    Originally posted by Alexland
    Yeah I agree, don't want to put more money in that. Is there a way you can lookup the P/E of a fund?
    • Alexland
    • By Alexland 9th Jan 18, 5:53 PM
    • 2,544 Posts
    • 1,928 Thanks
    Alexland
    • #8
    • 9th Jan 18, 5:53 PM
    • #8
    • 9th Jan 18, 5:53 PM
    There are lots of good free websites out there to analyse fund data. My favourite is the YouInvest Fund Quickranker but I would usually do a lot of research on many sites before making any trades.
    • DennisTenus
    • By DennisTenus 9th Jan 18, 5:58 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    • #9
    • 9th Jan 18, 5:58 PM
    • #9
    • 9th Jan 18, 5:58 PM
    There are lots of good free websites out there to analyse fund data. My favourite is the YouInvest Fund Quickranker but I would usually do a lot of research on many sites before making any trades.
    Originally posted by Alexland
    Thanks yes I do too

    I've got this fund with HL - https://online.hl.co.uk/my-accounts/fund_key_features/sedol/BBX4652

    Trying to find it with IWeb and although there is similar ones, it's not exact. IWeb has the option to search by "Fund Code" I've looked at every page on HL and the KID but can't find it. Am I missing something here?
    • DennisTenus
    • By DennisTenus 9th Jan 18, 6:02 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    Those are all good funds IMO. With the 45K I would add to Fundsmith and VLS80. Legg Mason IF Japan is great too but you probably don't need much more of it. The only other things you are missing is a smaller companies fund and/or an EM fund if you fancy a bit more risk. I can tell you which ones I have so you can research them yourself

    Baillie Gifford Global Discovery - overlaps a tiny bit with Legg Mason Japan but shouldnt be a problem
    Fundsmith FEET - one of the sustainable Stewart funds might be an alternative but many of them are soft closed (they have an entrance fee of 4%)
    Baillie Gifford Greater China - bit risky I reckon but huge gains for the moment
    Jupiter India
    Originally posted by Prism
    Sorry silly question probably but do your suggestions cover smaller companies and EM fund? Not sure what EM fund is btw?
    • Alexland
    • By Alexland 9th Jan 18, 6:05 PM
    • 2,544 Posts
    • 1,928 Thanks
    Alexland
    Trying to find it with IWeb and although there is similar ones, it's not exact. IWeb has the option to search by "Fund Code" I've looked at every page on HL and the KID but can't find it. Am I missing something here?
    Originally posted by DennisTenus
    Halifax SD / iWeb have less funds than HL.
    Last edited by Alexland; 09-01-2018 at 7:39 PM.
    • greatkingrat
    • By greatkingrat 9th Jan 18, 6:24 PM
    • 101 Posts
    • 90 Thanks
    greatkingrat
    According to my data Fundsmith has a P/E of 27 - the money has already been made on that fund, surely you cannot expect it to continue?
    Originally posted by Alexland
    The S&P500 P/E is currently 26.5, so unless you avoid equities altogether, whatever fund you choose to invest in will likely have a high P/E ratio.
    • DennisTenus
    • By DennisTenus 9th Jan 18, 6:26 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    The S&P500 P/E is currently 26.5, so unless you avoid equities altogether, whatever fund you choose to invest in will likely have a high P/E ratio.
    Originally posted by greatkingrat
    Even VLS 20 for example?
    • Alexland
    • By Alexland 9th Jan 18, 6:33 PM
    • 2,544 Posts
    • 1,928 Thanks
    Alexland
    The S&P500 P/E is currently 26.5, so unless you avoid equities altogether, whatever fund you choose to invest in will likely have a high P/E ratio.
    Originally posted by greatkingrat
    Even VLS 20 for example?
    Originally posted by DennisTenus
    No the shares in VLS funds have average P/E under 20 as they are globally diversified.
    Last edited by Alexland; 09-01-2018 at 7:36 PM.
    • DennisTenus
    • By DennisTenus 9th Jan 18, 6:45 PM
    • 158 Posts
    • 14 Thanks
    DennisTenus
    No the shares in VLS funds have average P/E under 20 as they are globally diversified.
    Originally posted by Alexland
    Even VLS 80 or 100 ?
    • bowlhead99
    • By bowlhead99 9th Jan 18, 7:17 PM
    • 7,970 Posts
    • 14,499 Thanks
    bowlhead99
    The only other things you are missing is a smaller companies fund and/or an EM fund if you fancy a bit more risk. I can tell you which ones I have so you can research them yourself:
    [Lists the smaller companies and/or EM funds that he has]
    Originally posted by Prism
    Sorry silly question probably but do your suggestions cover smaller companies and EM fund?
    Originally posted by DennisTenus
    Yes, silly question. that's exactly why he listed them...

    Not sure what EM fund is btw?
    Emerging markets ; as opposed to countries with developed markets

    If you don't really know what you're doing with this sort of stuff, there's no shame in recognising that and just putting more money into the VLS80 which covers the larger companies in broad global markets (including emerging markets). The emerging markets content of the equities within your VLS80 is about 7.5% of the equities you have in that fund. However, as you've added other funds such as Fundsmith and the Japan one on the side - which only have companies in developed markets - you will have diluted down the EM content of the overall portfolio. If you buy more VLS80, you will increase it again (as well as also increasing bond content, reducing volatility).

    By having your money in a fund such as VLS80 which allocates it to equities in all major regions (US, UK, Europe, Japan, other developed Asia-Pacific, emerging markets) and across asset classes (equities, government bonds, index linked government bonds, corporate bonds) it is like a ready-made portfolio all within one holding, right off the shelf. It covers the basic major areas you would want, and is far better than not investing at all.

    If you are going to decide that instead of VLS80 being your whole portfolio, you are going to leave space in the 70k total to add other things on top of that (i.e., dilute the VLS80 holding with other stuff), you should probably aim for that 'other stuff' to be areas that VLS80 does not cover. Rather than duplicating the stuff it already covers, or giving more exposure to a particular country or company type.

    The only reason really to add extra funds around the side of the VLS80 in a 'core and satellite' or 'hub and spoke' style, would be if you decide there are other asset classes or global regions or company types which are particularly under-bought by your generalist VLS80 fund, compared to what you want. If that is your goal, you could leave room in the 70k to accommodate them while having VLS80 be the core of your holdings, with the additional holdings just providing little tweaks to tilt the overall portfolio to whatever you like.

    However, to be frank, it sounds like you don't really know what portfolio you want to create and are just reaching out to us for ideas of what you might like to use to create a portfolio you might like. That is a bonkers way of allocating capital. You are just as likely to do harm than good, when messing with the allocations Vanguard gave you.

    The VLS series of funds is designed to be a whole portfolio of developed and emerging markets equities and bonds right off the shelf ; you could use it for an entire portfolio, or more experienced investors might want to complement it with something and add their own slant, if they know what it is they want to do and why they want to slant the portfolio in a particular direction. Likewise, the Fundsmith fund is designed to be a general global developed markets100% equities fund, leaving you to just add a few other things to balance out your overall asset allocation to what you want. The idea of buying VLS80, but then also adding Fundsmith, and then adding more Japan, and then going online and asking everyone around what extra funds they would fancy adding, seems like a mess.

    You don't need a portfolio designed by a committee of forum members with their own tastes and preferences and no vested interest in your actual goals and needs. You just need to buy something simple that isn't too risky/volatile for what you can handle. You can do that by buying VLS or one of their rivals, or by doing a lot more research and creating something uniquely custom just for you.

    With your level of experience it's unlikely you need something uniquely custom just for you. Following that path will just tempt you into doing things you should avoid - like trying to copy what other people with different levels of experience or risk tolerance have done, or just buying funds to stuff into your portfolio because they look nice in the performance charts due to having a high return in the last five to eight years when markets were rising rapidly.
    • Alexland
    • By Alexland 9th Jan 18, 7:34 PM
    • 2,544 Posts
    • 1,928 Thanks
    Alexland
    No the shares in VLS funds have average P/E under 20 as they are globally diversified.
    Originally posted by Alexland
    Even VLS 80 or 100 ?
    Originally posted by DennisTenus
    Yes the shares held in each VLS fund are basically the same (it's a fund of funds) at an average P/E of around 17 - the difference between the risk across the VLS fund series is the proportion of shares to bonds.

    Alex.
    • DrEskimo
    • By DrEskimo 9th Jan 18, 8:41 PM
    • 74 Posts
    • 57 Thanks
    DrEskimo
    This sounds like very logical and sound advice. You describe a behaviour I feel I am guilty of and so think it would be wise for me to take it on board...!

    Thanks
    • Prism
    • By Prism 9th Jan 18, 9:39 PM
    • 352 Posts
    • 269 Thanks
    Prism
    You beginning to see the problem? We all have different goals and attitudes to risk. Alexland is worried about a fund with a PE over 20 - I don't lose any sleep about a fund with PE over 40 (btw your Japan fund is 40). Some people like bonds - I don't have any place for them at all right now since they provide such a small return. Some people need their money within 5 years and are concerned about a crash - others are looking for a 30 year + investment and will likely see a few crashes during that time.

    Until you can be sure I would follow Bowlhead99's advice and stick to VLS80 and maybe add a small amount into a diverse fund if you want to assess your own risk level. But have a plan for your goal with it. Saying that, I am assuming you are coping with your Legg Mason IF Japan fund? Did you hold it at the end of 2016 when it dropped around 25% in little over a month? How did or would that make you feel? Since then it is up 55% but that's the easy part.
    • Prism
    • By Prism 9th Jan 18, 9:42 PM
    • 352 Posts
    • 269 Thanks
    Prism
    I have nothing against Fundsmith but that party happened, money was made, and now it's time to find something new.
    Originally posted by Alexland
    The party is only just beginning

    (with my half full glass)
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